Working With the Same Manufacturers Behind Many Luxury Brands

When it comes to creating a premium product for a luxury brand, the details of the manufacturing process may surprise you.

In this episode of Shopify Masters, we go behind the scenes of one entrepreneur's journey to find a manufacturer for his product and explore what he learned about how many luxury brands create their products.

Scott Gabrielson is the founder of Oliver Cabell: an accessories and leather goods brand built on the foundation of quality craftsmanship and clean design.

We had to craft the story correctly and present it in a way where they didn’t feel we were revealing all their trade secrets or client base or anything else.

Tune in to learn

What kind of challenges you’ll face when working with factories used by luxury brands

Show Notes

Transcript

Felix: Today I’m joined by Scott Gabrielson from Oliver Cabell. Oliver Cabell is a design inspired accessories brand built on the foundation of quality craftsmanship, and clean design. It was started in 2016 and based out of Minneapolis, Minnesota. Welcome Scott.

Scott: Hey, Felix. Thanks for having me here.

Felix: Yeah, so excited to have you on. Tell us a little bit more about the products. What are some of the most popular products that you sell?

Scott: So, we are a gruff consumer brand, as you said, launched in 2016, and our premise focused initially on bags and leather goods. That’s really the foundation of the brand. It’s really a deeper story to how that came about, but really the premise of it is that we as a team were spending some time in Asia and saw a lot of traditional luxury brands that we really loved and admired. They were producing a lot of the leather goods in parts of Asia that we found really subprime from a manufacturing standpoint. The price points were still incredibly high, but we saw the quality, the craftsmanship, and the work conditions, and we thought that there had to be a better way to really bring this category to life that really brought back those core elements that a lot of these heritage brands were found on.

Felix: Got it. Talk to us about the background of the business. You just mentioned that you went to Asia, you saw that the quality was not worth essentially the prices that people were paying for a lot of these luxury brands. How did you decide to focus specifically on bags and leather goods? Did you have a background in or wanting to start a business at that point?

Scott: No, it’s actually quite interesting. I was going to business school in England at the University of Oxford. This was in 2014 and 15. A lot of the traditional categories in fashion were being disrupted with this [inaudible 00:02:46] movement. So, obviously we began ours like Warby Parker and Our Lane and Harry’s and the rest, and we hadn’t seen much in terms of the leather goods space, which is obviously a category that I was innately interested in. I did study art in undergrad, so I had some background in design, if you will, but actually went a more traditional finance route.

But during that time when I was in business school, it seemed and we really confirmed that the highest markups associated in the fashion space were based around accessories and leather goods for a variety of reasons, but I think the foundation of it being that female purses and purses in general have always been something that was really coveted by the female gender, if you will, which innately just brought markups upon markups upon markups. Really, that infiltrated other categories, smaller wallets and other smaller leather goods. But the fact that a lot of these products are fairly timeless, can be used for a long time, and are meant to last for a long time, it think it allowed a lot of these brands to justify charging prices that were pretty high. I think at the beginning there was a reason for it, but as these companies started to go public and become larger parts of different holding companies, these margins kept increasing. And part of that’s due to the fact that a lot of these conglomerates are large public companies, so they have shareholder pressures and the like.

The problem that we saw was that when you buy products at high price, you innately think that this should be of high quality, and the reality of what we saw is that they were not. That’s something that we wanted to change, and that’s really where the foundation of the brand came from.

Felix: Now that you explain it, it makes perfect sense that the quality was not at the standard that would justify the high prices that people were paying. But once you saw that gap that there was this injustice essentially that was happening with the consumer, what were the steps that you had to take? How did you know that you had what it took to essentially go up against these massive luxury brands?

Scott: I guess the reality is we didn’t know. It was part of the learning process that goes about just charting anything in general, I suppose. But for us, we felt as recent college grads or graduate students that a lot of these brands we couldn’t really relate to. A lot of their advertising campaigns or the low, low rent product that they’re putting out there was not as interesting to us as a lot of the brands that were coming out of this time, again referencing the Warby Parkers of the world. That had a much deeper and richer story to what they were doing and why they were doing it, and we felt this category lacked that story and that interest in creating something that’s new and can be relatable to a variety of people but those that are really starting to spend a lot more time shopping online.

With that, it just turned into a learning process of just first getting to really understand what the market looks like and can infuse the players in it and what sort of dynamics that entails, and then going off and really figuring out if we’re focusing now on product, how are we gonna create the best product that we can. How can we tell the story so that everyone knows that the quality is what we say it is. And that really was part of how we built the brand, a lot of the brand story being around transparency and us dealing with who our factories are all the way down to what our costs are because we felt that if we were just gonna tell you that we’re producing a product that is of really high quality, there’s no reason for you to believe that.

There’s so much opaqueness to the industry in general that it’s really hard to believe a lot of what a lot of brands are saying nowadays. So, we felt we had to really open our doors and show people what we were doing and why we were doing it. That not only kept us accountable but allowed us to tell a story around our products and everything else.

That was really the foundation of what the brand was, and then we really dovetailed it into exploring what that looked like and building the brand and really what it exists like today.

Felix: How much of the brand, the messaging and I guess the story of the company, how much was that already built out before you started designing or manufacturing the products?

Scott: A lot of it was built out. There was a few core elements when we were building the brand that we knew we wanted to have. Part of it was that we wanted to be gender neutral. We felt leather goods often are gender neutral, if you will, and we wanted to be able to cater to both genders. We obviously have products that relate to one gender vs. another, but we always wanted to be a brand that really no matter who you are or where you lived or the like, you could shop with us and buy into what we were doing and our story and relate to it.

With that, we kept a few elements on the design side, they’re a quarter what we wanted to be, and that really is focused around having very clean and timeless products. We spent so much energy on creating the highest quality products that we can that we wanted to make sure that people could use them for a very long time. If it was something that was a bit more trend-centric, we felt that juxtaposed what we were trying to do as the brand in general, and with that all the elements into our web design to photography and the rest revolved around those core elements of clean design and timelessness and quality and just really trying to give people as much visual cues to what we are as a brand, mostly because we’re online only, and consumers can’t go in and touch and feel our products in person, so we had to truly translate who we are as a brand solely through our website and our social accounts and the rest.

Felix: If you do spend this time up front to really build out the brand, build out the messaging, how do you test if this kind of messaging will resonate with your target customers if you don’t have any products yet during that time where you are developing the brand?

Scott: It’s a good question, and for us we took the approach that’s a bit different than a lot of technology companies with a minimally viable product. We felt that if we’re gonna launch a brand, we need to have a lot of our core elements in terms of who we are and what we stand for fleshed out beforehand and really focus on building a brand that’s gonna last a really long time. We did not want to spend just be masters of paid advertising or the like and have that be the way we built the brand. We wanted to have the foundation very core from the beginning. It’s something that we know that we would need to grow on and continue evolving with.

The elements that we chose just to center the brand around are not incredibly foreign to the fashion space, if you will. We saw a lot of brands that are started to really reduce the amount of robo presence or whatever or really making their products a little bit more about the lifestyle than the fashion side of it. So, that gave us confidence that there was a space and a section of consumers that would be really interested in what we were doing and what we were building. But I think for us as well, we wanted to build something that we were interested in and liked and were passionate about.

We sort of fall into that target demographic, if you will, so we felt that if we were building something that we would want, hopefully other people would like it too, but at the end of the day we would always be really proud of something that we had and that we felt really strongly about, then really trying to build the brand that just resonated with the most in other people as possible.

Felix: Certainly the benefits of the approach you took will give you that cohesiveness and that strong foundation to build a business upon. I can certainly see how this can set you up for long term success much better than a test as you launch MVP approach as you mentioned. What kind of obstacles or what kind of challenges do you think you ran into by taking this approach of designing the brand first? Not necessarily in isolation, because like you were saying you are their target customer, but because you didn’t have anything that’s on the market yet but you were already spending time to design the brand. What kind of obstacle or challenges do you think you ran into with that approach?

Scott: Yeah, no, it’s a really good question, and it’s one that is … they’re prevalent when you’re spending a lot of energy around the brand. For us, we spent a lot of energy around photography, building a site. Even though it was fairly lean, we still wanted to have it done correctly. When we did that, we didn’t go out and raise a round. We’d just closed a round, but we didn’t when we went live. For us, it’s just purely financial. Like I think a lot of people that are building brands, there’s a constraint there, and there’s some things that you can get away with, but for us we felt that if we wanted to be taken seriously and we felt that people from press to consumers only wanna buy into things that they think and feel are gonna be successful long term. We felt that we had to get that structure built and that foundation established vs. us just going out and really trying to pull something together that we hacked together initially all ourselves, if you will.

We spent a lot of time thinking about what partners we wanted to be involved, who wanted to have involvement with the brand long term, no matter really where they were located or what their price points were. We spent energy thinking about who these partners are, why we want them on board, and how they can help us really grow from this initial infant company to hopefully a company that is around for a very long time. We wanted to make sure that we had those partners on board at the beginning.

Felix: Can you say more about these partners and what kind of partners are you talking about?

Scott: Yeah. No, it’s a good question. From everything from really like a web development standpoint to, again, photography to product sourcing and manufacturing and the factories and the rest. When you’re a really small brand, it can be very challenging getting yourself in front of, just to say, manufacturers or factories that are the quality and the scale that you want to be in front of. We do all of our production in Italy.

Italy, especially factories in Italy, especially in this category that we’re in, are probably the most guarded factories in the world, if you will. Those Italian leather makers of bags and small leather goods are highly coveted. They have no web presence. You cannot google and find them. They have no public information to reach out. It’s very much a network effect to how you can get to them. We spent a lot of energy making sure that we got to them before we even went live and they bought into what we were doing and our story vs. us just finding someone that was local or the like to produce our products. We wanted to make sure that we were in the factories and working with the suppliers that the best brands in the world used and the ones that we felt would give us legitimacy and give us the product that we wanted and ones that we could scale with. And I think that was a really important step for us is to flush out who those partners were, what that supply chain looked like before we decided to just bring something to market and test and see how it reacted.

Felix: Can you say more about how you broke into these factories? How were you able to identify which kind of partners you could work with and how were you able to get their attention and eventually the essentially buy in to work with you?

Scott: Yeah, that was a really challenging thing. Luckily I was living in Oxford at the time, which is about an hour outside of London. A lot of the best brands in the world have design teams or are headquartered in London, so luckily I had the chance to meet with a lot of designers that were working or had worked for some of the best brands in the world, best luxury brands in the world, or just best quality brands in the world. And with that was a really slow process of just starting to network with them and really have them understand what we were trying to do, and then slowly and confidently have them introduce us to the right people.

Felix: What did you find that they cared about most when you met with them? What about you, what about your company attracted them to you the most?

Scott: I think there’s two different parts to it. On the designer side of it, what we learned quickly was that most of these designers, even if they’re working for the Luis Vuitton’s of the world, they were still not making a lot of money or not getting paid [inaudible 00:16:46]. So, with that they’re always looking for either freelance opportunities or opportunities to be involved with other brands and the rest. We had a nice reception on that side of things. I think they also saw a lot of the traditional seasonal collections in the fashion space and more traditional brands suffering through what a lot of the online market was doing with a lot of people moving or purchasing online. So, they saw what we were doing as being something that was on trend, if you will, and a direction that they felt that this industry was going to.

When we went to the factories and were explaining our story, it was a little less … they had a little more struggle with understanding even what we were doing. We were talking about we were not gonna work with wholesalers, we weren’t gonna try to sell to the Barney’s and the Nordstrom’s of the world, that we were gonna pass along all these savings to the customer and sell products that they were used to manufacturing that would usually go for $1,200 or $1,500 US retail, bringing those down to a $200, $300, $400 price point. And it took a little bit more convincing for them to understand why that makes sense and why we’re giving up all that margin and the rest. But I think the reality is, as well, with European manufacturing is that these guys have all been suffering because of so many brands seeing how important margin is and going public as other companies in the west, moving to these developing countries, so a lot of their customers that they have had for a long time were changing to cheaper places to manufacturer.

This was the one category and one space where they could actually keep their legitimacy as a true leather goods maker that’s focusing on high quality and the rest while still adapting to changing consumer economics and consumers not wanting to spend $2,000, $3,000 on product. We were giving them that opportunity to grow with a brand that was still interested in what they wanted to do, and that’s a core part of who we are is producing high quality products, but also someone that could grow with them over time.

Felix: So, they weren’t just looking at how much you could pay them, how much you could order from them. They really wanted to see are they going to be working with a business that can be successful, that is operating in a growing market.

Scott: Yeah, that’s one thing that we’ve learned. We had heard quickly and learned as well that onboarding a new brand probably with any industry that you’re in, it’s a lot of work. There’s a lot of sampling. There’s a lot of prototyping. There’s a lot that goes behind it, and they don’t wanna produce one run for any brand and spend all that investment. They wanna be able to put that investment into the brand and continue working with them and build that relationship and understand how people work together and the rest. If they don’t feel that you’re gonna be able to bring that to the table, then they’re just really not gonna wanna work with you just because there’s so many brands out there that come up and open their doors one day and close their doors the next. They have an immediate standoffishness to that approach just because of how much time and energy goes into working with these companies. They’re obviously running a business too and need to keep their lights on, so they wanna work with people that can grow with them and increase volume with them and everything else.

Felix: Mm-hmm (affirmative). To some degree the factories that you ultimately ended up working with, they are a part of the at least the key ingredients in the secret sauce of these luxury brands. When you started to talk to these factories, did you ever run into any pushback or run into any obstacles because you were tapping into these factories that were being used by massive luxury brands?

Scott: We did. A lot, actually, depending on the factory, but a lot of them, they did not want any transparency into who they are, what their story was or the rest. So, a big part of what we do is tell that story, and if they weren’t willing to be open with us in sharing who they are and letting us tell their story then we really didn’t want a part of it, didn’t think it was the right partnership for the brand that we wanted to build. The reality is that they have a lot of really expensive, high luxury brands that they work with, and those brands never want to have someone else producing at the same or higher quality and they’re not priced much lower than they are that are telling a story of people relating to. That goes very much against where they’re at now, focusing so much of their time and energy on the heritage of who they are and why that legitimizes the prices that they can charge.

So, with that we had to find the right partners that believed in what we were doing. We had to craft the story correctly and present it in a way where they didn’t feel we were revealing all their trade secrets or client base or anything else. It’s sort of an evolutionary approach in terms of getting past that hurdle

Felix: Now, once you found these factories, there’s of course a lot more to it than just looking at the factory. You mentioned that there was an entire supply chain that you had to learn more about. Talk to us about this. What other parts of the supply chain did you have to spend your time focused in and learning more about?

Scott: For us, a big part of what we do is around leather and other materials. Just innately, the fashion industry is a high polluting industry. Creating leather, as well, is one that can involve a lot of toxic chemicals and the rest. We went through a pretty rigorous process of understanding who were the best and most environmentally friendly tanners in the world, but also the ones who producing at a really, really high quality. That’s always the struggle is balancing those things.

And on the third side of it, making sure that it’s at a price point and quantity point that works with us as well. So, we had to spend a lot of energy on vetting who those suppliers were and what that looked like. It just evolves into understanding how much colors that they can offer and different seasonal collections and the rest. So, there’s so many moving parts that we had to vet through to make sure that we found the right partner, but we ended up with a tannery that’s one of the most coveted tanneries around. They also have a very unique supply chain, and they actually hold leather skins on hand that are colored and already tanned, which is very rare nowadays. Traditionally, you would have to maybe purchase 1,000 square meters of a certain color, which would be hundreds and hundreds of products per units, if you will. And with that we were able to get that down to we can produce a few products in a few colors as we really need to.

For us, it’s understanding who those correct partners were and who worked for what we were trying to do and where we’re trying to go going forward. We’re actually launching footwear this fall, and a big part of that is making sure that we have the ability and adaptability to work with partners that can both service both of our categories and all the different sizing and SKUs and the rest that go into having a category that has a lot of those issues that cannibalize it.

Felix: Mm-hmm (affirmative). How do you identify whether a factory or a tannery is of high quality, and then how do you ensure that they uphold those standards in your manufacturing or in the raw materials that you purchase?

Scott: Yeah, great question. For us on the vetting side of it all, we work with a few folks in Europe. We actually have a full-time team in Europe that helps us go through that vetting stage. They have backgrounds in this space, and there’s reputations [inaudible 00:25:23] who people wanna work with, who people do not. The fact that we are doing everything in Europe mitigates slightly a lot of the issues that happen when you’re seeing a lot of product development in some more developing countries, if you will. Less issues around labor issues or really, really poor quality conditions, but the reality is that you need to have someone on the ground and someone that’s checking these things and is approving and making sure that requirements are being held to the standards that they set with us.

I think at the beginning one of the things that we thought was probably a pretty good way to vet these partners was to really try to get an understanding of what their client base already looked like and what brands they were working with, then we would really understand who those partners were and what their stories were and their values were as well. That tended to be a pretty good way to vet these things, but there’s no way by any means saying that there are a lot of incredibly expensive or luxury, if you will, brands out there that produce in spaces with materials with factories that are just not of quality or conditions that you would want to really have those products up.

There’s a lot of trust that goes into it, but making sure that you spend the time to do the research … And this just goes back to us at the beginning wanting to build this foundation on the supply chain and the brand side of it before we just tried to really create a product and put it out to the market and see how people reacted to it. We wanted to make sure that these elements that we really valued around quality and transparency and value and the rest were elements that were real and true and part of who we were as a brand. And when we were gonna open our doors to everyone from a transparency side and revealing side of it all, it has to be what we told everyone, that it is what it is, and we had to show them as well. With that, it kept us in check and made sure that we really vet these partners correctly before we just started working with them.

Felix: Got it. So, you hire a consulting company on the ground typically to help vet and ensure standards are upheld?

Scott: It wasn’t really a consulting company per se. We brought on some more so consultants than freelancers that would help us with that initial introductions and vetting process, but we went through a lot of it ourselves, and that just goes back to the financial constraints that a lot of startups have is that you can’t bring in someone and pay an exorbitant amount of money and expect them to do all the work for you. So, it was really a balancing act between it all, but we had to learn it as well, not just rely on them to actually do all the vetting for us.

Felix: Right. So, does that mean that you guys are going to these factories and going onto the floor? How involved can you get when you want to make sure that the quality is to your standards?

Scott: Yeah. Our team is in the factory every single day. They live within five kilometers of where the factory actually is, so they’re always working with whatever the tannery might be or the actually production factory or the rest and checking everything every single day. That was an incredibly important thing for us was to have someone else close who could be there actually checking things. Part of our team, not just someone that we hire to do so. So, with that, we’re always getting updates, and we just feel so much better about how things are going for us.

Felix: Mm-hmm (affirmative). And based on your experience, any red flags that you now look out for when it comes to a manufacturer or a raw material vendor that you now know to look for that signals that it’s a company that you don’t want to partner with?

Scott: Yeah. I think there’s just these gut instincts that most people would have. If you go into a factory and it’s really dirty and you see things that are just in shambles, if you will, it’s probably a signal in terms of how they run their business. When you’re really trying to be optimizing local partners that you wanna be with for a really long time, it’s probably best to void those potential issues if you can see them right away.

Another thing for us is just having people that … We speak, obviously, with a lot of owners of different factories or suppliers or the rest, and really making sure that we can trust who they are and what they say and the rest. We’ve had suppliers or factory owners that have finagled maybe, not lied, but weren’t incredibly truthful in terms of what they would say. We would do our due diligence and recognize that. Maybe it was a very convenient factory or the pricing was really great. If we couldn’t build that trust with them from the beginning, then we didn’t think it was someone we wanted to build really a longer term relationship with.

There were sort of innate things that I think anyone would pick up and really listen to your gut and not just say, well, it’d be so much easier or more convenient to go with this partner, but really think about if this is someone you wanna partner with for a really long time.

Felix: Mm-hmm (affirmative). So, obviously you’re spending a ton of time, a ton of money, a ton of resources behind the scenes on creating a higher quality product. How do you make sure that your customers see all of this and see the benefits of all the work that you’re putting in behind the scenes?

Scott: Yeah. I think the customer doesn’t always see it. It can be challenging, right? That just goes back to our transparency and our storytelling who we are and who we’re working with. We spend a lot of energy around those elements of it, through our site or through email [inaudible 00:31:39], and that’s really the best way for us to communicate. There’s only so far you can go for making sure that the imagery or the rest fully echoes all those values that we’re talking about or showing or the rest.

Felix: You mentioned transparency a couple of times. Can you give some examples of things that you as a company have been transparent about that maybe you don’t see other companies doing?

Scott: Yeah. I think the one that really stands out the most is around or pricing. If you go onto our site and look at a product, you can see the price breakdown, everything from transportation, labor, materials, duties and the rest in terms of what we’re paying, and then we show, obviously, what our retail pricing is. So, we’re transparent around even what our margins are, which there’s a couple brands in the world that do that and something that we felt really help tell the story on what our products were and what they stood for and the quality around it, and also helped justify to people and let them understand why our pricing is the way it is. We are not the cheapest brand out there by any means, but we try to really create as much value and translate as much of that value to the consumer as possible. We keep our margins as low as we can while still being a profitable and growing for-profit company.

But there’s a lot of costs that just go into a product that you’ll never be able to communicate completely.

Felix: Right, yeah. I’m looking at it right now, looking at price breakdown for one of the backpacks, and there’s literally 10 or 11 line items with the actual cost of what goes into a product like this. Obviously this transparency, I think, will win a lot of customers trust in you. Has it hurt you in any way, hurt you as a company? Given this kind of transparency, how has it as such affected you as a business maybe not in such a positive way?

Scott: We actually haven’t had really any pushback to it. I think people if they think that we’re taking too much margin, we haven’t had really anyone come back with that, but I think people really understand before they would do that that we’re being very open with these things, which is keeping us very honest with what we’re doing and that fact that we are revealing everything that we can. We’ve had situations where we’re importing a product and the duties are incredibly high on it. We just thought that’s the way it was, and we actually had customers reach out and say, hey, are you using the right codes with your duty imports and local [inaudible 00:34:26]. We would’ve never have known that without having that sort of transparency.

Felix: Wow, that’s amazing that your customers are helping you out in that way. Now, let’s talk about launch. When you first launched the store, launched the business, what products did you have for sale? How many of these different products that you have on the site how were available on the first day?

Scott: Yeah, so we just had a couple of products when went live, and the way that we actually structured our launch is that we did a built in referral program, if you will. We had a landing page that shared our transparency and what we were trying to do. What we were really trying to spend a lot of energy on was capturing emails so that we could tell that story when we went live and had an audience to launch to. So, we built in this referral program that essentially incentivized people to spread the word on what we were doing either by giving them sneak peeks of product or early access or discounted product or the rest. It allowed us to build an email list of roughly 15,000 before we even went live, which was a big part of our initial launch.

And then we spent a lot of energy working with editors and talking to editors and press to really make sure that when we went live we had an audience go live, too. We felt that we only had one chance to launch the brand, and we spent a lot of energy on making that launch something that was gonna feel successful.

Felix: I love that, that you already had an audience before even having any products for sale. So, this referral program, how did you kickstart it off? Because referrals, of course, are great, but you need that initial referrer that starts spreading the message, so how were you able to drive the intention and traffic early on to start the viral process of the referral program?

Scott: Yeah, good question. This just went into us just doing the groundwork. We emailed almost 500 or 600 people just telling them what we were doing and our story and what we were building and said we would love to have them help us out spreading the word and the rest and had the team reaching out to everyone of their family members and friends and posting on social and everything else. We didn’t got out, and we didn’t raise a ton of money. We weren’t prior founders of some very successful company. We had to really go out there and tell our story. People were not gonna just come to it and listen, so we spent a lot of energy on really networking with everyone that we knew and telling them what we were doing, and that’s what really jump started the entire thing.

Felix: So, were these customers or potential customers? Were they big publications? What are would you say people should focus on if they wanted to take the same approach that worked for you?

Scott: On the referral side of it, we felt that only people that knew us and our values and what we were trying to build would be the ones that would actually help spread the word on what we were doing. So, we really focused on those people that knew who we were personally and reached out to them. We spoke to everyone’s prior bosses and begged them to email out to their department what we were doing, childhood friends that we hadn’t spoke with in 10 years. Those are the people that will open an email. They will respond, and they may go online and submit their email and refer some friends that they know that might think that might be interested.

Going out to large publications or editors, they’re getting so much stuff coming through their inbox and when you’re just a really small brand with nothing to really say or show yet, it’s gonna be really challenging for them to really want to write something on you. So, we felt that if we could go this route then we could have it be very successful. We were able to tell press that we launched with 15,000 email before we even had a product, and those are the sort of stories they find really interesting and wanted to write about in general. So, we were able to tackle that side of it by really using our groundwork the grueling amount of energy that went behind that to funnel it.

Felix: What drives the sales today? Is it the email list still, or what works for you guys today?

Scott: Yeah, so it’s really a combination of a lot of things. One, and most important one for us, is word of mouth, and that’s always what we have seen to be not only the best from a customer acquisition side of it, but one that brings in the best customers for us. We have a fairly large social following, and we have an email list that’s now much more robust than what we launched with. We use really a combination of all of those channels in conjunction with press to help continue our story.

But now that we’ve been live for a little over a year, we luckily have built this audience just by working with a lot of partnerships or doing different campaigns or whatever it might be to help get the word out for us. There’s not really one thing. I wish there was. It would be easier for everyone if there was that one thing that really just … energy on, but it really truly is a combination of all those elements that lead to the success.

Felix: What are some ways that you are encouraging word of mouth from your customers?

Scott: Yeah. We have done a bit of a give 20 get 20 promotion. If someone refers someone, they’ll get a $20 credit. If the other person purchases, then that person would also get a $20 credit, which is a nice way to incentivize things, but I think at the end of the day if you don’t have a product that’s really interesting, people don’t want to put their personal brand and personal reputation on the line. They’re not gonna refer no matter how much you incentivize them or tell them to, so we try to not be incredibly pushy on it but just make sure that we’re there for them, and after they purchase from us, we follow up with them and make sure that everything’s going smoothly and they’re happy and they love whatever they bought from us. And that seems to be really the best way to incentivize those referrers, if you will, just to take that time and energy and really put it into your current customer base in hopes of they’ll appreciate it and they’ll help you grow at the end of the day as well.

Felix: And of the social channels that you have set up, which one has been the most effective at driving traffic and sales?

Scott: For us on the branded side, Instagram is still incredibly important since it’s such a visual platform. From a marketing or paid advertising standpoint, Facebook is probably the best for us in terms of really driving clicks and people to the website. But we think Instagram is probably the most important in terms of actually building that brand and having people relate to that brand. Yeah, it’s kind of [inaudible 00:41:57].

Felix: Interesting thing. I’m sure this is on purpose with your Instagram is that most of the photos are not of your product. Maybe out of 10 photos, there’s one of a backpack in this case that I’m looking at. Then it’s not for another 10 or so photos before another photo of the weekender bag that I see. What was the thinking behind this approach?

Scott: We wanted to use Instagram as a few things. One, if we thought that if we just kept showing our products, it really loses its … it becomes a little less interesting, if you will. So if we were gonna just show tons of pictures of various bags in different settings or situations or different angles or corollaries, it might not be actually that interesting to the customer. They wanna understand who we are as a brand, and so we try to show everything visually on what that means. If that’s actually a specific product or if that means showing certain destinations or architecture or whatever it might be to really help them understand who we are, what our core values are from either the design side or the rest, but also things that are just interesting for them to see and not just repetitive seeing the same thing over and over again.

Felix: Mm-hmm (affirmative). And when it comes to Facebook with the paid ads, are you using Facebook for retargeting or are you using it also to bring in first time visitors through Facebook as well?

Scott: No, we use it mostly just for retargeting. We don’t do a lot of customer acquisition at this point through Facebook. Again, we hadn’t raised any money, so we’re very conscious on where we were putting our dollars, but now we do retargeting through Facebook. They’re actually in an app called Shoelace, which plugs into Shopify nicely, and they’re great. You can think of it as almost like an email drip campaign where they’re sending different messages to those that were on your site in various ways, and they drip them those messages or those ads. It’s very targeted, if you will, and they’ve done the analysis of after a certain number of days there’s no reason to keep returning or this is the sort of ad you should show them next. They’re incredibly great, and they actually almost act as like this quasi-agency/platform. Their customer service is unbelievable. They’re willing to help you as almost like agency would, but yet they’re at a price point and you can spend $5 a day working through them instead of these massive rates that you traditionally get. We’ve found them to be a great partner for us.

Felix: Right, yeah, because typically with retargeting ads that you might set up yourself, you might just have one image or one version of the copy that you hit your past visitors with, but with Shoelace the way you’re describing it is that they hit the user with different messages, maybe different images, maybe different copy as they get more and more exposed to your brand and then decide to taper off over time if it’s not working or bring them to different drips and different funnels if they are being responsive to your ad. Certainly a different way. Certainly a new way and a pretty innovative way that I’ve seen retargeting set up. Certainly worth checking out.

You mentioned Shoelace. What other kind of applications do you use to help run the business?

Scott: There’s really probably two other ones that we spend … one that is important to us but we don’t spend as much time in, which is Privy, like an email popup capture tool. That allows us to A-B test how we capture emails on our site. We still find email being an incredibly important way for us to communicate with our customer base or our potential customer base. Anyone that comes to the site, we wanna hopefully capture their email if we can, so we really spend a lot of energy thinking through that and how we can drive that capture.

Secondly is we use ShipStation like I’m sure a lot of people on Shopify do. It’s just really great from a shipping standpoint and has been incredibly great for us getting awesome rates and the rest. Those three are pretty important to us.

Felix: What about the referral program? Do you remember what you used to launch that?

Scott: We actually had custom code created for it, which we hired a developer off of UpWork to do so, which worked fine. We’re running another referral program, which is a little bit lighter, but it involves our shoe launch, which is coming. We actually have it on our site right now, and what we are using is a platform called ViralSweep. It’s a platform that’s used for giveaways or sweepstakes, so if you partner with a lot of brands the goal is to drive all these people to giveaways. Everyone puts in their emails and they enter to win this prize. We actually reverse engineered this platform a little bit and are using it as a way for people to enter their emails but also they then have a unique URL link that they can share with whoever they want, and whoever they share it with it reads to this ViralSweep that their email is attached to whoever they were referred by, which allows us to give credit in whatever form that may be.

It’s a much cheaper way than having someone build up custom code, and it’s also using this platform a little big different way than what’s intended for.

Felix: Got it. And you mentioned earlier about the A-B test that you’ve run using Privy to get more opt-ins for your email list. Can you share some of the tests that you’ve run that have resulted in big bumps in opt-ins?

Scott: Yeah, sure. There’s different ways based on timings, so how quickly that popup actually comes up on the site. If it’s 3, 5, 15, 30 seconds, those all change the opt-in rates. Also, what that copy looks like, so that obviously has an effect. And how the popup is occurring, if it’s a dropdown or if it’s something that’s on the bottom of the page or the top of the page or actually jumping out on the page. Those are all things that we were testing as well as, again, going back to the copy. If there’s a way to incentivize people to actually enter their emails, that’s gonna change what those opt-in rates are as well.

Testing through all those different elements are how we’ve gotten to where we’re at now. We’re still working through that and optimizing that even further, but our opt-in rates are now around 10% to 15%, and I think an average is around probably 1% to 3%, so we’re pretty happy with that.

Felix: Yeah, definitely impressive, and these are tests that you really have to run on your own site to get an understanding of what works and what doesn’t work for you. Were there any tests that you ran that you saw a very significant decrease in opt-ins that you maybe recommend maybe people don’t try or don’t implement for their email signups?

Scott: Yeah. We didn’t try them, but for us there’s just this main reaction to work with that feels very pushed or really aggressive, if you will. It turned us off wanting to opt-in, so there’s a variety of ways. You want to incentivize someone to sign up and they get a coupon code or whatever, that’s a great way to get people onboard and capturing their emails and converting them to a first time customer. But just making sure that the way that you’re doing that is not in this incredibly aggressive, bold with exclamation points, and it’s like if you don’t enter you don’t know what you’re doing, you’re being stupid. Those are the things that through the research we had done would demotivate people and turn them off from the brand. There’s obviously this fine line to making sure that you still can incentivize them, and that’s a great way to actually optimize that conversion as well. So, just being thoughtful about it and not making it seem that they have to or there’s really no end in sight for them.

Felix: Mm-hmm (affirmative). Makes sense. Now, you’ve been live since 2016, which is last year. How has the team grown? How has the company grown since the beginning?

Scott: There was just a couple of us when we went live, and now we’ve tripled our size split between full-time and part-time people. We also just raised an initial round of financing, if you will, so that helped engage … it gave people a deeper understanding of where we’re at on the pro side of things and the confidence that people had in what we’re doing and building. But we’re still very young and in our infancy. With this new category coming up for us, we’re actually implementing a new drop model, if you will, where we’re actually gonna be releasing one new shoe style every single week going forward, which successful or not just sort of innately makes us double the size of the team just given the amount of supply chain work that’s needed, sourcing work that’s needed, fulfillments and everything else. There’s a variety of reasons why we’re taking this approach, but we’re growing quickly and now that we’re expanding on the marketing and the budget side of it all, it helps us fuel that growth as well.

Felix: Awesome. Thanks so much, Scott. So, olivercabell.com o-l-i-v-e-r-c-a-b-e-l-l .com. So, looking forward, what plans do you have? You mentioned that the shoes are coming out. Where do you wanna focus the company in the next year or so?

Scott: Yeah, I think for us we really wanna solidify that category and what it means. We just wanna continue getting the word out on who we are and what we’re doing and the rest. We wanna make sure that we’re being very thoughtful with our growth but continue to expand and tell people our story.

Felix: Awesome. Thank you so much for your time, Scott.

Scott: Thanks, Felix.

Felix: Here’s a sneak peek for what’s in store the next Shopify Masters episode.

Speaker 3: Success is your worst enemy because once you start getting one right, two right, you think you got everything.

Felix: Thanks for listening to Shopify Masters, the eCommerce marketing podcast for ambitious entrepreneurs. To start your store today, visit shopify.com/masters to claim your extended 30-day free trial. Also, for this episode’s show notes, head over to shopify.com/blog.